ABA Section of Business Law

• predominantly triggered by the parties
• widespread experience with the process
• used in most types of disputes
• extensive growth predicted
• parties perceive gain in process control
• wide variety of sources for mediators
• some uneasiness about qualifications of mediators
• used in almost all industries

• predominantly triggered by contract
• slightly less experience with process
• used in narrow set of disputes
• growth limited, if at all
• parties uneasy about control of process
• arbitrators come primarily from private providers
• less confidence in arbitrators
• usage in some industries much higher than others

Three critical questions embody the essence of the business lawyer’s legitimate concerns. These questions must be answered to the legal community’s satisfaction before mediation can be fully accepted as a legitimate tool for the fulfillment of the obligation of zealous advocacy:

• Does mediation require deference, even when insincere?
• Does mediation require compromise, even when unprincipled?
• Does mediation require peace, even when unachievable?

If experience reveals that the answer to any of these questions is "yes," then business lawyers, ethically obligated to provide zealous advocacy to their clients, will rightly refuse to recommend mediation to their clients.

To a certain extent, the skeptics are correct. A few mediators do seem to believe that soft voices, restrained tempers and the spirit of Woodstock are necessary and sufficient antecedents to a "happily ever after" result. Fortunately, there is more to mediation than this simple scenario. In the business world, other models of mediation have developed with other priorities and values suited far better to the needs of business lawyers, their clients and their cases.

Let there be no doubt: If anyone tells you, or even implies, that mediation requires insincere deference, unprincipled compromise or unachievable peace, then you have just heard the ADR world’s version of "the three great lies." There are other possibilities:

• Mediation is about directness and honesty, not insincere deference.
• Mediation is about clarity, not unprincipled compromise.
• Mediation is about progress, not unachievable peace.

Directness and honesty. In many business cases, stakes are high, relationships between the parties have long histories and emotions run deep. A soft-voiced, even-tempered conversation is unlikely by itself to achieve meaningful resolutions. Often parties as well as counsel — need to speak more honestly and more passionately about the conflict, in its legal dimensions and in the dimensions that run more deep.

Every legal conflict has aspects beyond the legally cognizable claims and defenses. Be they financial, emotional, relational or otherwise, these aspects may be the most significant to the parties. The best advocates not only understand this, but accept it and give it its due. After all, when the client came to the lawyer, the client probably did not lay out "a short and plain statement of the claim," at least not in the way Rule 8(a)(2) of the Federal Rules of Civil Procedure requires.

Rather, the client probably came in with a story, probably longer than the lawyer wanted to hear, that was a narrative history of the parties’ relationship. That story provides a complete context, of which the present conflict is only a part, and without which the present conflict is difficult fully to understand. From this first account, the advocate cuts, pastes and weaves pieces of the story into the templates of legal claims and defenses. Along the way, much of the detail, subtlety and nuance so important to the client are left behind.

In the mediation of many business disputes, the parties initially concentrate on the strengths and weaknesses of their claims and defenses. But often that is not enough. A purely legal discussion frequently does not permit the clients to deal with, as radio commentator Paul Harvey might put it, "the rest of the story." This unspoken aspect, the "it" that the drafter of pleadings had to leave outside the courthouse, may be centrally important to the clients, and may need to be acknowledged before a more rational discussion of the settlement of the lawsuit can take place.

Mediation gives a perceptive lawyer the extraordinary opportunity to allow "the rest of the story" to be discussed, a far greater opportunity than is generally available in court. Many times, this opportunity is the lawyer’s key to a higher level of client satisfaction. In case after case, clients who are not permitted to address their personal "it" are left frustrated, whether or not they win on the merits of the legal case. These clients are likely to remember the cost, the delay and the inconvenience of litigation more than their victory, which they see as incomplete.

By contrast, in mediation the lawyer can permit the client to talk about "it," whether or not relevant to the issues in the pleadings. Discussion of that personal "it," the fact or issue that really eats away at the client, places a premium on directness and honesty, not the superficial pleasantry of insincere deference. The actual conversation can be emotional, blunt and direct — the antithesis of "nice-nice." In fact, the more candidly the client is willing to enter into these deeper issues, the more heated the conversation generally becomes, at least until the emotional bile is spent. Sometimes this down-and-dirty discussion takes place in a joint session. More often, it occurs, at least initially, in a private caucus, where there is less fear that candid disclosures expose your client to exploitation.

But wherever the discussion takes place, the more frank it is, within broad limits, the more sincerely satisfied the client is likely to feel with the result and the process, and the more likely the client is to give credit where it belongs — to you, a part of whose zealous advocacy was to recommend the mediation process and to prepare for and manage its implementation.

For some advocates, this approach presents an unusual challenge. Lawyers tend to be most comfortable when the discussion focuses on the law. "The rest of the story" can take the lawyer into territory that seems unfamiliar, uncomfortable and beyond the scope of control that many believe it is their duty to maintain. How, then, can lawyers encourage discussion in just the right measure, balancing the need to allow a beneficial discussion of not-strictly-legal issues and the need to maintain control over the process and protect their clients from possibly abusive hostility from the other side?

Here, the advocate and the mediator can work together. When the need for clients to speak more candidly becomes apparent, the mediator may break the sides into private caucuses. Sometimes, the advocates recognize this need before the mediator does, based on their more extensive knowledge of their clients and the other side, and make the helpful suggestion that the time to caucus has arrived. Once apart from the others, each side can let its hair down without fear that its candor will offend or antagonize those others to the point where negotiations cannot proceed. In addition, each side can talk without the fear that its candor will provide the other side with "free" information that will be used to its detriment.

At this point, an important part of the mediator’s job is to work with the parties to gauge how much of the content of a private caucus should be communicated from one side to the other, in what words, how soon, and by whom (the mediator? the lawyer? the client?) in order to balance honesty and appropriate deference to sensitivities of feelings. If the cards are well played, the parties and the mediator will explore, directly and honestly, all aspects of the conflict necessary for meaningful progress in their negotiations.

Clarity. In a perfect world, we would all negotiate reasonably and cases would settle quickly and amicably. Maybe we would never have to file lawsuits at all.

In the real world, it doesn’t always work that way. In any negotiation, including a mediation, parties can be reluctant to be viewed as "too reasonable." The concern is that our reasonableness may work to our clients’ disadvantage, and the other side will be rewarded for stubborn intransigence. That is, the mediator will twist harder on the arm of the "reasonable" negotiator simply because it is more malleable, squeezing out concession after concession until the parties’ positions meet.

No lawyer wants to be "reasonable" if it works to the client’s detriment — or to have a client come back weeks or months later and announce resentfully, "You let that mediator bully us into a bad deal." At least until it’s clear how reasonable the other side is prepared to be, it may be risky to be reasonable and safer to be stubborn. Sometimes, too, mediation is rejected because of the concern that the mediator will urge unprincipled compromises under the banner of "being reasonable," just to get the case settled and out of an overcrowded court system, without concern for the participant’s perception of the fairness of the settlement terms.

In well-run business mediations, stubbornness is not rewarded. Mediators with even a smidgen of foresight know that it is not in their interest, either, for your clients later to accuse you of having let "reasonableness" cause a bad deal. Smart mediators know that you, in turn, will simply blame the mediator for your client’s dissatisfaction. And you are not likely to bring repeat business to a mediator who leaves your clients dissatisfied with your lawyering performance.

An impasse born of stubbornness is not necessarily, however, the end of mediation’s utility. Even at that point, several possible steps can be taken, all of which benefit the advocate as well as the client.

First, the mediator can acknowledge that a lawyer’s advice does, in fact, appear reasonable. Put another way, in light of the other side’s stubbornness, further changes in your position may not be rational at this time; you may be well advised to go ahead and litigate. This simple acknowledgment, assuming that it is made with integrity, is one of the greatest benefits a mediator can confer on an advocate. This acknowledgment signals that litigation — even with its inevitable expense, delay and inconvenience — may be the most appropriate option. If the client has a chance to weigh the choices, and picks litigation over an "unreasonable" or "extortionate" settlement, the lawyer gains some protection from a frequent client criticism, heard farther down the road, that the litigation "took on a life of its own," without the client’s knowledge, much less consent.

Whatever course the litigation follows after this decision, the lawyer benefits from the client’s involvement and participation in that choice. If discovery and motion practice ensue, for instance, and attorney’s fees mount, it is only because the client had the opportunity to decide, in concert with the lawyer, that the costs and benefits of continued litigation are a better choice than the best settlement available. The client’s heightened role in the decision-making process helps minimize dissatisfaction when the costs of that choice must be paid.

There is still more that the search for clarity through mediation can do to benefit the lawyer advocate. In many cases, mediation reveals just what is causing the parties’ settlement postures to differ so greatly. Then, the parties can negotiate methods to address that cause efficiently.

For example, in many business cases, the key barrier to settlement is disagreement on one or a few legal or factual issues. Once that diagnosis is made, the prescription is usually straightforward. Generally, if a factual issue is key, the next step is to obtain documents through a Rule 34 request or a third-party subpoena, depose a key witness, or obtain comment from one or more experts.

If a legal issue is key, the next step may be to fashion an appropriate motion for partial summary judgment under Rule 56 or other appropriate relief. If the court is made aware of the circumstances under which the motion is brought, the parties are more likely to receive meaningful suggestions from the bench, if not an outright determinative ruling.

Once a stubborn party has articulated the reasons for its intransigence, and the validity of those reasons has been rebutted or confirmed, it is almost certain that negotiations will have more room in which to progress. When new facts or law become available, most clients are willing to accept their advocate’s counsel and adjust their settlement postures with reason. For the advocate whose goal is to be both zealous and efficient, this process can make a material difference.

So viewed, mediation is not necessarily "alternative" dispute resolution at all, at least not in the sense of proceeding in place of litigation in all regards. Rather, mediation may best be viewed as a process that can work in tandem with litigation, regulating and disciplining the litigation genie, and sometimes getting it back into the bottle altogether. A business dispute can, and often does, shuttle between mediation and litigation, using the mediation forum for negotiation and the litigation forum to gather facts and clarify the law, so that negotiations can progress.

Mediation does produce settlements at a high rate. Mediation can be most effective, however, when settlement is viewed not as an end in itself, but as the natural by-product of having clear choices presented to the client. If clarity is increased, so that clients can decide more intelligently how to proceed, settlement will likely result. But the grail of settlement should not divert attention from the usefulness of mediation as a tool for effective client counseling. Lawyers who use mediation this way have performed their duties as the zealous advocate well, settlement or not.

Progress. Some business lawyers deride mediation as utopian poppycock, tilting at the unachievable: an unending, unimprovable state of tranquility and harmony between the parties. In the business world, such a goal is unrealistic at best and a waste of time at worst. If this is indeed mediation’s true goal, then lawyers would be correct to avoid it.

In actual practice, though, business mediators understand that most parties and counsel are not interested in the pursuit of dream worlds. Mediators understand that a model with that goal is unrealistic and almost always doomed to fail. Instead, business mediators focus on the same goals as other business lawyers: the development of the most sensible ways to deal with whatever conflict the parties present at the time, addressing whatever impasse blocks progress at that moment.

The central question concerns how clients can move on to the next step — and just the next step, one step at a time — in the most meaningful and durable way. This practical approach is quite different from a focus on ethereal "peace." It is instead a facilitation of progress.

In the business context, most clients recognize — sometimes more clearly than we do as counsel, who may seek the static goal of a "definitive" litigation "win" — that a state of peace, or even equilibrium in which things balance and will not change, is unrealistic. The world, the economy, our clients’ industries and companies, even our clients themselves are in constant states of flux, change and growth. New challenges and opportunities are invented every minute. The goal is to meet as many challenges and take advantage of as many opportunities as we can, as well as we can, and as efficiently as we can. Nor do reasonable clients expect more. Reasonable clients expect only opportunities to make progress, and mediation can help fulfill this important expectation.

Mediation allows clients to meet a challenge — the resolution of a particular conflict — more efficiently than they could if they used traditional litigation or unfacilitated negotiation alone. The Deloitte & Touche and Price Waterhouse surveys confirmed what many thought obvious, that business clients prefer mediation because they believe that it saves time and money. When one challenge is met more quickly, the next can be addressed that much sooner. Because mediation helps accomplish these important client goals, it is a service that we should be proud to provide.